"Class Action Ruling an Earthquake for California Litigation"

Michael Rubin of San Francisco's Altshuler Berzon said the decision doesn't actually prohibit class actions in arbitration, so the handful of class actions his firm has will likely move forward.

"All the decision today says is that a clause prohibiting class actions cannot be the basis for striking down an arbitration agreement as unconscionable," Rubin said. "That means arbitration agreements can still be struck down as unconscionable on other grounds," such as if it limits substantive rights or remedies. He said he expects to see a rise in mass tort cases to make up for the curb in class actions.

On Friday, the Recorder had another article on Concepcion, "Plaintiffs Don't See Easy Way Around AT&T Ruling" by Cheryl Miller (subscrption). Among other things, this article says that a California State Senator plans to introduce "a legislative countermeasure" to the decision.

In light of Justice Thomas's concurrence, I suppose such legislation would have to declare that contractual class action bans (whether related to an arbitration clause or not) are unlawful and void from inception (instead of merely unenforceable as Discover Bank held). That would bring such bans within the savings clause of section 2 of the Federal Arbitration Act, as Justice Thomas interpreted it. Presumably, that would in turn shift his vote over to align with the four dissenters.

As Justice Thomas reads it,

[Section 2] require[s] enforcement of an agreement to arbitrate unless a party successfully asserts a defense concerning the formation of the agreement to arbitrate, such as fraud, duress, or mutual mistake. [Citation.] Contract defenses unrelated to the making of the agreement—such as public policy—could not be the basis for declining to enforce an arbitration clause.

Under this reading, the question here would be whether California’s Discover Bank rule relates to the making of an agreement. I think it does not.